A 4-year period has seen various changes in the big players in Uganda`s Financial Institutions business with the liquidation of Crane Bank Ltd. Following the decision by the Bank of Uganda to liquidate the crane bank, a series of events followed, leading to eventual liquidation in 2018, and lots of lawsuits followed, with the Ugandan Court of Appeals declaring that the receivership of Crane Bank Limited had ended in January 2018. The supreme court of Uganda found it illegal and an exhibition of bad faith for the Bank of Uganda to put crane bank in liquidation, thereby reaffirming the decision of the court of appeal.,
Key considerations and imports.
One of the key things the court addressed was the foreign act of state rule. The court observed that the courts in foreign jurisdictions would not adjudicate or sit in a judgement on the lawfulness or validity under its law of an executive act of another state (foreign state) performed within its territory.
Several exceptions exist to this rule, including public policy, commercial Activity, and Kirkpatrick.
But let me zero down this article to the commercial activity exception.
Recognized in the oldest decision of Empresa Exportadora de Azucar V Industria Azucarera Nacional SA (1983), the commercial activity exception to the rule of the act of foreign state has progressively been revisited with the recent one being Korea National Insurance Coprn V Allianz global corporate and specially AG (2008), which decision is being followed by the one under dissection.
All the decisions are to the effect that the doctrine does not apply where a foreign state’s conduct is of a commercial as opposed to a sovereign character.
The relevant act must be scrutinized to determine its character. The fact that it was carried out in a context or for broader governmental activities is not determinative. Acts that are initially sovereign can subsequently involve private acts.
The court concluded that there was no merit in the appellants` attempt to introduce an Article 6 proportionality test in applying the foreign state rule.
The appeal was allowed on the ground that serious issues should be tried as to whether part or all of the appellants’ claims fall within the commercial activity exception and/or the Public Policy exception.